UK retailer Morrisons ended 2017 strongly, posting a 2.8% increase in sales in the ten week period to 7 January, and seeing like-for-like sales up 3.0% in what is traditionally the busiest time of the year for retailers.
Here's how the analysts saw it...
Clive Black, Shore Capital
"Against two-year positive comparatives the Group has reported a very good performance to us with ex-fuel like-for-like (LFL) sales up by 2.8% (Shore Capital forecast, 2.0%; Vuma consensus 1.7%). Stripping out Wholesale revenues, Retail LFL sales rose by 2.1% comprising volume growth and good mix to our minds, volumes are reported as ‘positive’.
"Following this update we are not, as expected, changing our FY2018 profit expectations. Morrisons is in good shape, the balance sheet is strong, which may lead to an evolution of the Group’s Capital Allocation Strategy in CY2018, with further self-improvement, broadening (e.g. McColl’s) and growth (e.g. new stores) to come through."
Danielle Pinnington, Shoppercentric
“Better than anticipated results from Morrisons this morning showing that shoppers spent a greater proportion of their Xmas cash with the supermarkets this year. The importance of online and Morrisons emerging wholesale arrangements are clearly strong contributors to this performance.”
Barclays European Food Retail Equity Research
"Group LFL sales (ex-fuel) rose by +2.8%, compared with company consensus of +1.7% (and Barclays at +1.4%). Within this figure, the Retail contribution to LFL was +2.1% (vs consensus of +1.3% and Barclays of +1.0%). Group total sales growth (ex-fuel) was +2.6% (vs Barclays at +1.3%). The six-week period over Christmas was even stronger, with Group LFL sales up 3.7%. [...] This is clearly a very strong set of figures – we await the release of market share data at 8am today to better understand whether Morrison has done exceptionally strongly or whether the wider market has been very strong."
Fiona Cincotta, Cityindex.co.uk
"Morrison's recovery story just keeps getting better. It's ability to maintain healthy sales growth over the crucial Christmas trading period was always going to be a true test and it appears to have passed with flying colours. Like-for-like sales growth has bounced back after easing slightly in the third quarter. Credit must go to management for keeping prices stable during Christmas despite the weaker pound creating higher input costs.
"Exactly how well margins hold up might not be be revealed until Morrison's releases its final results in March. In the meantime, this positive trading update could well get the company's share-price revival back on track after it stalled somewhat in September."
Bruno Monteyne, Bernstein Research
"The strong results are driven by improvements in store, much better availability from the new ordering system, and very strong growth (25%) in their new 'Best' premium range. Morrisons customers are no longer having to shop elsewhere for their more upmarket products. [...] This is a good start for UK food retail. We should temper excitement a bit as we don’t know yet how the non-food catch-up contributed (MRW only recently stepped up its Non Food offer)."
© 2018 European Supermarket Magazine – your source for the latest retail news. Article by Stephen Wynne-Jones. Click subscribe to sign up to ESM: The European Supermarket Magazine.
